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Kevind3456

posts: 3

May 23, 2007 3:02 AM ET Quote Report Abuse

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I am considering a regulation D offering for start up capital for my business venture, specifically rule 506 because I will need at least 10 mil. My question is say I plan to sell 30% of my company through the regulation D offering, in order to retain my 70% ownership interest, do I simply just offer the 30% and get to personally keep the left over 70%? Could somebody shed some light on this topic because I am unsure of how the onwer/issuer maintains the control they desire, I haven`t found a clear cut answer, thanks for the help.

robertj

posts: 1458

May 23, 2007 11:49 AM ET Quote Report Abuse

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If I understand your questions correctly - the answer is

Percentage of ownership is the ratio of share owned divided by total shares issued. Therefore, if the corporation issues 70 shares to you and 30 shares to another person (in exchange for capital) then - at that moment you would own 70% of the outstanding shares.

As a side comment - selling 30% of the company for $10 million would require you to justify a $33.3 million valuation (post money) on your business.

Contact me directly if you want to discuss your specific situation.

-------------------------

Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

MNGrillGuy

posts: 236

May 23, 2007 12:15 PM ET Quote Report Abuse

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Robertj, $33.3 would be post-money, pre-money of $23.3.

-------------------------

Travis Tschepen
Hibachi Bros. LLC

--My goal in life is to be as good of a person my dog already thinks I am.--

InactiveMember

posts: 705

May 23, 2007 12:34 PM ET Quote Report Abuse

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Get a lawyer to help you.

robertj

posts: 1458

May 23, 2007 1:06 PM ET Quote Report Abuse

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Robertj, $33.3 would be post-money, pre-money of $23.3.

MNgrill guy,

Sorry - I mis typed. Thanks for the correction.

Kevind3456

posts: 3

May 23, 2007 5:55 PM ET Quote Report Abuse

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That was how I thought it would work, and I would have no way of justifying its worth 30+ million, thats the problem with equity, but I should have clarified that I don`t plan on raising all the funds through equity, I would like to at least raise 3 mil through debt, and maybe also issue some convertible debt, that could be converted after the company meets a certain income level, but do you think that would turn equity investors away? Since that could potentially dilute there share? I could specify to the equity investors that they could have the opportunity to purchase more stock to maintain their share if they wish to upon the conversion by other investors, and that would provide me with more capital in the far future when were profitable. Just brainstorming, any suggestions thank you!

MNGrillGuy

posts: 236

May 24, 2007 8:56 AM ET Quote Report Abuse

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You`ll need to speak with a professional. There are many options for deal structure. Can the venture start on a smaller scale?? You will need to show some results before going for $10M.

You have a .001% chance of raising millions of dollars for an unproven start-up unless you have a long history of home runs behind you. My advice would be to start small, prove it locally, then go for the big money.

-------------------------

Travis Tschepen
Hibachi Bros. LLC

--My goal in life is to be as good of a person my dog already thinks I am.--

robertj

posts: 1458

May 24, 2007 12:22 PM ET Quote Report Abuse

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That was how I thought it would work, and I would have no way of justifying its worth 30+ million, that`s the problem with equity, but I should have clarified that I don`t plan on raising all the funds through equity, I would like to at least raise 3 mil through debt, and maybe also issue some convertible debt, that could be converted after the company meets a certain income level, but do you think that would turn equity investors away? Since that could potentially dilute there share? I could specify to the equity investors that they could have the opportunity to purchase more stock to maintain their share if they wish to upon the conversion by other investors, and that would provide me with more capital in the far future when were profitable. Just brainstorming, any suggestions thank you!

There are several ways you might go to acquire capital for your business. Each approach will have positives and negatives. Developing your optimum capital strategy is a good next step.

Contact me off forum if you want to discuss specifics about your situation.

Kevind3456

posts: 3

May 28, 2007 1:00 PM ET Quote Report Abuse

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Robertj,
Thank you for your replies, I have contacted you privately through this website.

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